I finished my "retirement planning course". It was administered by financial sharks. The course was a good refresher.
Because I am a suspicious soul, I was determined to find out more about the financial services of the company doing the presenting. They were obviously looking for "leads" to make money. So here is my take!
A company named Morgan Stanley which provides broker/dealer services headquartered in New York is always looking for clients to buy financial services, trade stocks and bonds and conclude sale of mutual funds. I don't know what their total fees amount to but last year their top officials received bonuses of over $10 million. So they are making a buck.
In an effort to reach the "little guy" like me, other mom and pops, and grandma and grandpa's, Morgan Stanley franchised a branch office (broker and dealer) in Green Bay named Batus. They pay Morgan Stanley some fees and channel financial transactions through "big daddy". This branch dealership was the group doing the presentation of the course materials. Their goal was to find new clients and provide financial services. They make money offering advice to clients and handling their transactions.
Batus major selling point was that they could find 3rd party unbiased financial groups to watch your investments and move them quickly if negative things were happening in the market. The third party made about 2% of the value of your investments. By the way, you had to give power of attorney to the 3rd party to buy and sell mutual funds for you. Yeah, right!
Most of the investments that the 3rd party watched were stock mutual funds. Stock mutual funds normally have fees in the 1% range but if you buy certain mutual funds, 5% charges can be incurred. So the mutual fund companies are making big bucks.
So if you were following carefully, Morgan Stanley (a big shark) created a branch office called Batus (a smaller shark) to help widows and orphans manage their money. Batus hired a 3rd party financial group (a rogue shark) to watch your investments and move them around if necessary. The unbiased 3rd party worked with mutual funds groups (parasites to sharks) to suck transaction fees out of you. By my count you have a chain of 4 groups, each sucking off 1%-3% for a total of 8%-10% in fees. They get their 10% in fees before you make a dime. Just a note. The stock market was up 2% last year. That is not a good situation.
My guess is that there were some pretty smart people in the finance class. I think a lot of small business families attended. They didn't accumulate money by being stupid. They recognized a shark for what it is. If it looks like a shark, swims like a shark and feeds like a shark, it is a shark.
You work too hard to earn your money. Don't swim with the sharks.
Love,
Dad
I work for a financial company only on the administrative side and I always wondered what the 8-10% fee transaction was. Thank goodness I don't invest like that.